Case study: Options rules and IT costs

We've noted here frequently that new regulations often leading to higher IT costs. Indeed, you can't have one without the other: Reg NMS, Reg Show and all the way back to the order handling rules. They have all imposed some substantial costs in IT back offices and front offices.

It's no different when it comes to the options markets. A major regulatory effort to bring decimalization-like pricing and link exchanges is underway. New server capacity to handle the expected increase in volume from penny instead of nickel increments will be required, notes Securities Industry News, as will new switches and higher capacity pipes to handle the additional data and a few software tweaks. There will also need to be some tweaks once additional short-selling rules are in place. All of this costs money, but if you are surprised by the added costs, well, shame on you. This is a time-worn tradition on Wall Street. 

For more:
- here's the article

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